Resistance Isn't Helping

Interestingly, we'd usually look for at least an intraday break above resistance on a head fake move to convince the "Buy the Dip" buyers that they were right and encourage the "Chasing" crowd to chase the break above resistance, setting up a perfect head fake trade entry and exit (for positions such as yesterday's closing IWM calls, Entering VERY Speculative IWM July 17, $125 Call

However so far this morning the market is playing by text book rules, former support becomes resistance  rather than the more normal reality rules of head fakes, pumps and dumps.

The SPX-500 has been the best example of support and now resistance this morning.

The daily SP-500 with the two former tags of support at the 150 sma and the bounce off that, the reversal process last week in yellow and the return to stage 4 decline with a break through support at the pink 150 sma, this morning we are bumping up right against it.

There's a bounce set-up in place, if it were larger and stronger yesterday's play on the bounce, the Entering VERY Speculative IWM July 17, $125 Call would not have been speculative, but full size, even though I wouldn't expect it to last much longer, I would expect it to perform better so we are getting price action not too far off what we should expect given what was put together yesterday.

However if we want to know whether this oversold bounce has a chance of making significantly higher gains beyond resistance, set some price alerts for the SP-500 above the 150 sma around $2078.50 and a bit higher, also look for TICK to confirm. Otherwise this may be a short lived little correction if they can't get the technical trader crowd to bite.